M/S. BANDHNI BOUTIQUE PRIVATE LIMITED, Indore V. THE ITO 3(2), Indore

ITA 279/IND/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5795 (ITAT-INDORE)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-01-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 28-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G S GAUTAM
• Assessee Lawyers: ANIL KHANDELWAL
• Keywords: Loose papers
• Section: 133A

Judgement Text

ITA NO.279 OF 2015 BANDHNI BOUTIQUE 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE SMC BENCH, INDORE BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.279/IND/2015 A.Y. 2006-07 BANDHNI BOUTIQUE P. LTD., INDORE PAN AACCB 6944 R :: APPELLANT VS ITO-3(2), INDORE :: RESPONDENT ASSESSEE BY SHRI ANIL KHANDELWAL, CA RESPONDENT BY SHRI G.S. GAUTAM, DR DATE OF HEARING 29.12.2015 DATE OF PRONOUNCEMENT 09.02.2016 O R D E R THIS APPEAL IS FILED BY THE ASSESSEE CHALLENGING T HE ORDER OF LD. CIT(A)-I, INDORE, DATED 29.12.2014. 2. FIRST GROUND OF THE APPEAL OF THE ASSESSEE IS WI TH REGARD TO APPLICATION OF SECTION 145(3) OF THE I.T. ACT WHERE AS SECOND GROUND RELATES TO ADDITION OF RS.4,13,650/- ESTIMATING G.P . AT 23% OF SALE. 2.1 FACTS, IN BRIEF, ARE THAT SURVEY U/S 133A WAS C ONDUCTED ON 21.10.2005 AND DISCREPANCIES LIKE, EXCESS STOCK AT RS.18,22,766/-, ITA NO.279 OF 2015 BANDHNI BOUTIQUE 2 SHORT CASH AT RS.5,59,137/- AND THE LOOSE PAPERS WE RE FOUND DURING THE COURSE OF SURVEY. THE ASSESSEE FILED ITS REPLY, WHICH IS PLACED AT PARA NOS.3 TO 6 OF THE ASSESSMENT ORDER. HOWEVER, T HE AO HELD THAT AS MANY LOOSE PAPERS WERE FOUND, WHICH ESTABLISH TH AT THE ASSESSEE HAS NOT MAINTAINED THE COMPLETE AND CORREC T BOOKS OF ACCOUNT, FROM WHICH, THE CORRECT PROFIT CANNOT BE W ORKED OUT. THE AO FOUND THAT SALES TO THE TUNE OF RS.9,88,809/-, S OME PURCHASES/EXPENSES WERE NOT RECORDED IN THE BOOKS O F ACCOUNT. THEREFORE, THE AO REJECTED THE BOOKS OF ACCOUNT INV OKING SECTION 145(3) OF THE ACT AND ESTIMATED THE TOTAL TURNOVER AT RS.55 LACS IN PLACED OF RS.46,15,081/- SHOWN BY THE ASSESSEE INCL UDING SALES ESTIMATED ON THE BASIS OF LOOSE PAPERS APPLYING G.P . @23 AS AGAINST THE DISCLOSED G.P. @18.04% SHOWN BY THE ASS ESSEE, WHICH RESULTED AN ADDITION OF RS.4,13,650/-. THE LD. CIT( A) CONFIRMED THE ACTION OF THE AO RELYING ON THE DECISIONS IN CASES OF MUKESH OIL MILLS P. LTD. (2014) 264 CTR 196 (RAJ); PANSARI GEM S LTD. (2013) 252 CTR 452 (RAJ) AND SHREE GANPATI EMBROIDERY P. L TD. (2009) 178 TAXMANN 176 (P & H). BEFORE ME, THE LEARNED COU NSEL FOR THE ASSESSEE SUBMITTED THAT BOOKS OF ACCOUNT SHOULD NOT BE REJECTED MERELY BECAUSE LOOSE PAPERS WERE FOUND DURING THE S URVEY ITA NO.279 OF 2015 BANDHNI BOUTIQUE 3 PROCEEDINGS. HE ALSO DREW MY ATTENTION TO AVERAGE G .P. RATIO OF PREVIOUS YEARS @19.36% AND SUBMITTED THAT IN THE PR ESENT YEAR, G.P. HAS BEEN SHOWN AT 18.04%, WHICH IS RIGHT IN VI EW OF THE DECISION OF RAIPUR TRIBUNAL IN CASE OF ITO VS. SHRI NIRMAL KUMAR KHETPAL HUF (2015) 25 ITJ 537, WHEREIN, ON THE SIMI LAR FACTS, G.P. @18.79% WAS HELD TO BE JUSTIFIED. BUT, IN THE PRESE NT CASE, THE AO HAS ESTIMATED THE G.P. @23% WHICH IS ON HIGHER SIDE . AO WAS NOT RIGHT IN ESTIMATING THE SALE OF THE ASSESSEE AT RS. 55 LACS AGAINST RS.46.15 LACS SHOWN IN AUDITED ACCOUNTS ON THE BASI S OF LOOSE PAPERS. HOWEVER, ALL LOOSE PAPERS WERE HAVE BEEN PR OPERLY EXPLAINED. ON THE OTHER HAND, LD. DR RELIED ON THE ORDER OF THE REVENUE AUTHORITIES. 2.2 I HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON THE FILE. I FIND THAT THE AO HAS RIGHTLY REJECTED THE BOOKS OF ACCOUNT AS DURING THE COURSE OF SURVEY PROCEEDINGS, THE ABOVE DISCREPANCIES WERE FO UND, WHICH COULD NOT BE EXPLAINED IN PROPER PERSPECTIVE. THERE FORE, FIRST GROUND IS DISMISSED. HOWEVER, SO FAR AS SECOND GROUND IS C ONCERNED, I FIND THAT FOR MAKING A BEST JUDGMENT ASSESSMENT, THE AO WAS RIGHT IN ESTIMATING THE INCOME BUT HE IS ALSO SUPPOSED TO MA KE A FAIR AND ITA NO.279 OF 2015 BANDHNI BOUTIQUE 4 REASONABLE APPROACH IN ESTIMATION OF INCOME. BEFORE ME, THE ASSESSEE HAS FILED A PAPER BOOK RUNNING INTO 48 PAG ES INCLUDING WRITTEN SUBMISSION, WHEREIN, THE RELEVANT DOCUMENTS HAVE BEEN ANNEXED. THE AUTHORITIES BELOW COULD NOT APPRECIATE THE FACT THAT ASSESSEE HAS SHOWN G.P. NOT MORE THAN 19.68% IN THE PREVIOUS YEARS. THE AVERAGE G.P. OF THE ASSESSEE FOR THE PAS T FOUR YEARS IS 19.36%. THEREFORE, G.P. CANNOT SUDDENLY JUMP ON HIG HER SIDE. 5. ON CONSIDERATION OF ABOVE FACTS AND CIRCUMSTANCE S, NATURE OF BUSINESS, SUBMISSIONS AND DISCUSSION THEREOF, WE AR E OF THE VIEW THAT ESTIMATION SHOULD BE FAIR AND REASONABLE BUT I N THE PRESENT CASE, THE AO/LD. CIT(A) HAS APPLIED/CONFIRMED IT ON HIGHER SIDE, THEREFORE, IN ORDER TO MEET AN END TO THE JUSTICE, IT WOULD BE FAIR AND REASONABLE IF G.P IS APPLIED @19.36% IN PLACE OF 23 %. I ORDER ACCORDINGLY. 3. SO FAR AS 3 RD & 4 TH GROUNDS REGARDING ADDITION OF RS.3 LACS ON ACCOUNT OF EXCESS STOCK ARE CONCERNED, I AM OF THE VIEW THAT I HAVE DISMISSED GROUND NO.1 CONFIRMING THE ACTION OF THE REVENUE AUTHORITIES WITH REGARD TO APPLYING SECTION 145(3) AND AS SUCH, LD. CIT(A) WAS RIGHT IN RECORDING THE FINDING THAT DURI NG SURVEY, STOCK WAS FOUND AT RS.38,67,026/- BUT THE AO REDUCED SUCH STOCK FOUND ITA NO.279 OF 2015 BANDHNI BOUTIQUE 5 TO RS.23,98,317 AND EVEN AO FURTHER REDUCED RS.95,0 00/- CONSIDERING THE ASSESSEES SUBMISSION AND THUS ARRI VED AT AN EXCESS STOCK OF RS.3 LACS. CONSIDERING THE SAME, I DISMISS THE GROUND NOS.3 & 4 OF THE APPEAL OF THE ASSESSEE. 4. IN THE RESULT, THE APPEAL IS ALLOWED PARTLY. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 09.2.201 6. SD/- (B.C. MEENA) ACCOUNTANT MEMBER DATED : 09.2.2016 !VYS! COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR, INDORE ITA NO.279 OF 2015 BANDHNI BOUTIQUE 6